A Chinese toy maker that supplied household US brands such as Mattel and Disney has gone bust because of the financial crisis, leaving up to 7,000 people jobless, the company and local officials said yesterday.
Hong Kong-listed Smart Union Group (Holdings) Ltd (合俊集團) closed its factory doors in southern China’s export hub of Dongguan this week, leaving its unpaid workers stranded outside the plants and leading to government concerns about protests.
Smart Union announced on its Web site yesterday it had gone into liquidation, giving no word about the fate of its employees.
PHOTO: AP
“Between 6,000 and 7,000 workers from two Smart Union factories are involved,” said a local government official in Zhangmutou, an area of Dongguan where the factories are located.
The woman, who declined to be named, said government officials were locked in talks with factory and workers’ representatives to resolve the crisis, adding that local authorities would try to pay the workers next week.
The workers crowded around the gates earlier this week looking for answers about their jobs and unpaid salaries, prompting the Zhangmutou government to warn them against escalating their action.
“At this time, I hope you will believe in the local government, respect the law and not do anything that would hurt or cause concern to your parents and family,” it said in a statement on its Web site on Thursday.
The local official said the crowds had dispersed by yesterday.
Telephone calls to Smart Union’s offices in Hong Kong went unanswered yesterday, but China’s state-run press quoted a company official blaming a drop in sales to the US amid the global economic turmoil.
“The main reason for the closure is we are too dependent on the US market, which has become sluggish,” Xu Xiaofang, a Smart Union human resources worker, told the China Daily newspaper.
Rising labor costs, expensive raw materials and the appreciation of the yuan, contributed to the problems, Xu said.
Smart Union had already announced to the exchange a loss of HK$201 million (US$25.9 million) in the first half of the year, according to the firm’s accounts posted on its Web site.
Its shares on the Hong Kong stock exchange were suspended from trading on Wednesday.
The group had sold many of its products to US toy giants Mattel and Disney, the China Daily said.
“After losing money for the first half of the year, its cash flow finally dried up,” the paper said.
“The workers ... have become the latest victims of the worldwide financial tsunami,” it said.
Chinese state press had already reported this week that more than half of the nation’s toy exporters had gone broke this year, hit by rising production costs, the stronger yuan and tightened safety standards for their products.
A total of 3,631 enterprises that made toys for export, or 52.7 percent of all such companies, had gone out of business in the first seven months of the year, Xinhua news agency reported.
The businesses were mainly smaller producers with an export value of less than US$100,000, it said, citing a report by the General Administration of Customs.
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